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    AXON
    Earnings call· Jun 2025(Q2 FY25)

    AXON ENTERPRISE Q2 FY25 earnings call AXON

    Aug 4, 2025 Source

    Executive summary

    Axon Q2 FY25 — Accelerated Bookings and Strong Product Adoption

    Axon delivered another strong quarter, driven by accelerating demand for new technology and robust adoption of its expanding product portfolio across both existing and new markets. The company is seeing significant traction with its AI Era Plan and new hardware, leading to record bookings and a confident outlook for continued growth, despite planned investments and tariff impacts in the second half.

    Highlights

    5

    • Q2 revenue of $669 million increased 33% year-over-year, marking the 14th consecutive quarter of over 25% growth.

    • Software and services revenue grew 39% year-over-year to $292 million.

    • Net revenue retention increased to 124%, maintaining near or above 120% for 20 consecutive quarters.

    • Bookings for the AI Era Plan reached almost $150 million in Q2 alone, with over 30% of total bookings from new product categories.

    • Secured the largest deal in company history with a major city police department, encompassing drones to AI products.

    Concerns

    2

    • Adjusted EBITDA margin benefited from the timing of tariffs, which will impact the company more in the second half of the year.

    • The company expects to increase hiring over the remainder of the year, particularly in R&D, which will impact profitability in the short term.

    Guidance & targets

    5
    CategoryTargetConfidence
    Full-year 2025 Revenue
    $2.65 billion to $2.73 billion
    high materiality
    High
    Full-year 2025 Adjusted EBITDA
    $665 million to $685 million
    high materiality
    High
    Full-year 2025 Bookings Growth
    high 30% range
    high materiality
    High
    Hiring Increase
    increase hiring
    medium materiality
    Medium
    Q3 and Q4 International Business
    very exciting quarters
    medium materiality
    Medium

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Software and Services
    Growth driven by winning new users and adoption of newest products.
    		$292 million39%——
    Connected Devices
    Growth driven by strength across categories, including TASER 10, Axon Body 4, counter-drone, and virtual reality.
    TASER growth: 19%Personal sensors growth: 24%Platform Solutions growth: 86%
    		$376 million29%——

    Operational metrics

    10
    Net revenue retention
    124%
    Q2 FY25

    Demonstrates results of ongoing investment in products and customers.

    Adjusted gross margin
    63.3%up 20 bps YoY
    Q2 FY25

    Expected balance to continue in the second half as the company mixes across new investment areas and software business growth.

    Adjusted EBITDA margin
    25.7%
    Q2 FY25

    Came in ahead of expectations, with tariffs expected to impact more in the second half.

    Bookings from new product categories
    over 30%
    Q2 FY25

    Indicates increasing contribution from new products.

    AI Era Plan bookings
    almost $150 million
    Q2 FY25

    Significant bookings for the AI Era Plan in the quarter.

    Maximum per officer spend
    over $600up from less than $300 a few years ago
    current

    Per officer bookings in largest deals pushed up against this level.

    Officer Safety Plan (OSP) pricing
    mid-$300sup from mid-$200s 3 years ago
    current

    Price changes reflect added value to the bundle.

    AI Era Plan list price
    $199
    monthly

    Adds to the overall value proposition for customers.

    Customers on basic plans
    70%
    recent quarter

    Indicates significant room for customers to upgrade to more premium plans.

    International business growth
    20%
    Q2 FY25

    Brittany Bagley noted this growth, but cautioned it might not maintain at this level due to lumpiness and strong growth in other segments.

    Orderbook & backlog

    2
    Largest deal in Axon company historyrecord-breakingQ2 FY25

    Encompassed everything from drones to AI products with a major city police department.

    Largest deal in Corrections team historyrecord-breakingQ2 FY25

    Contributed 2 of the top 10 deals in the quarter, including products across the ecosystem (TASER 10, body cameras, VR, evidence management, Fusus).

    Deals & partnerships

    3
    DedroneAcquisition of counter-drone technology company.

    Dedrone's technology addresses the growing threat of small drones, positioning Axon as a market leader in counter-drone solutions. It also helps in international market entry.

    Gaming space customerFirst contract in the gaming vertical.

    Included AI products, indicating broad applicability of Axon's solutions. Primarily video-centric (body cameras, Fusus) for security.

    SkydioPartnership for Drones as First Responder (DFR) programs.

    Axon partners with Skydio for DFR, focusing on software value like live streaming and evidence management. Skydio is not a big part of Axon's direct revenue, but the partnership enables other offerings.

    Capital programs

    1
    TASER 10 capacity rampunderway

    Benefit: increased manufacturing capacity

    Continuing to ramp TASER 10 capacity due to great demand, reflected in increased CapEx guidance.

    Risks & headwinds

    5
    Tariff impact on profitabilityH2 FY25

    will impact us more in the second half of the year

    Mitigation: Incorporated into adjusted EBITDA guidance; company is developing plans to mitigate and manage through.

    Increased hiring impacting short-term profitabilityremainder of the year

    increase hiring

    Mitigation: Prioritizing investment in R&D and new markets to set up for 2026 and beyond; disciplined G&A management to offset.

    Social displacement and immigration problems in Europecurrent

    surging social problems

    Mitigation: Axon's products (e.g., TASER 10, real-time translator) are seen as essential tools to address these issues, with potential for large deals.

    Hybrid warfare from Russians (border security)current

    pushing sort of an encouraging mass migration across the borders is a destabilizing function

    Mitigation: European border agencies are seeking solutions like TASER 10 and real-time translation, seeing them as primary defensive tools.

    Police department staffing shortagescurrent

    14% of departments are essentially not at full staffing levels

    Mitigation: Technology (AI, DFR) helps make officers more productive, automates workload, and allows departments to reallocate budgets from personnel to tech.

    What to watch in Q3 FY25

    5

    Bookings growth rate

    next quarter
    Currenthigh 30% range
    Targetcontinued acceleration

    Why it matters

    Bookings acceleration is a key indicator of future revenue growth and market penetration, especially with new products.

    Coming off a strong 1H with a growing pipeline, we now have line of sight to deliver year-over-year bookings growth in the high 30% range, which would once again put our second half in line with the prior year's entire campaign.

    Q&A highlights

    6

    Can you elaborate on success in the enterprise market and which products are gaining traction? Also, can you parse out the success driving the bookings acceleration?

    Enterprise is seeing broad interest across body cams, Evidence.com, Fusus, drones, and counter-drone. The bookings acceleration is due to strong execution from product and sales teams, driven by selling new products to existing customers (drones, AI, VR, Fusus, Dedrone, software add-ons) and selling existing products to new markets (international, enterprise, federal).

    “it's not one thing, and that's one of the things we're most excited about is we feel like we're very diversified. We have a lot of ways to win the game, so to speak, and we're going to keep investing in all of them because we see a ton of opportunity ahead.”

    asked by Keith Housum · answered by Joshua Isner

    2 min read6 chapters

    Detailed Narrative

    01

    Accelerating Demand for New Technology

    Axon is experiencing an acceleration in customer demand for new technologies, including AI, drones, robotics, real-time operations, and the latest TASER and camera devices. This adoption is occurring at an unprecedented🌐 pace, with Draft One, TASER 10, and Axon Body 4 being the fastest adopted products in their respective categories. This rapid uptake is attributed to the trust built with customers over decades, allowing for quicker integration of new solutions.

    02

    Record Bookings and New Product Contribution

    The company achieved record bookings in Q2 FY25, including the largest deal in its history with a major city police department, covering a broad range of products from drones to AI. The corrections team also closed its largest deal ever. New products contributed over 30% of total bookings, with the AI Era Plan alone generating almost $150 million in Q2 bookings, highlighting the success of expanding the product portfolio.

    03

    International and Enterprise Expansion

    Axon's investments in international and enterprise markets are yielding significant results. The international team secured a new TASER customer in Africa, becoming the largest in the region, and is seeing strong momentum across LATAM, the U.K., Europe, and parts of Asia. In the enterprise sector, Axon signed its first contract in the gaming space, which included AI products, indicating broad applicability of its solutions beyond traditional public safety.

    04

    Product Portfolio Expansion and Per-Officer Value

    The expansion of Axon's product portfolio has significantly increased the potential spend per officer. Just a few years ago, the maximum per-officer spend was less than $300; today, it exceeds $600 due to new offerings. The Officer Safety Plan (OSP) has evolved to include drones, AI, VR, Fusus, and Dedrone, with the AI Era Plan further enhancing value. This strategy allows for continuous upgrades and increased adoption of premium bundles.

    05

    Strategic Investments and Future Outlook

    Axon remains committed to investing heavily in R&D to support its product roadmap and new market opportunities. The company plans to increase hiring, particularly in R&D, to drive future innovation. Management believes this strategic investment, combined with disciplined G&A management, will ensure sustainable growth and continued leadership in public safety technology for 2026 and beyond.

    06

    Impact of Technology on Staffing and Workload

    With many police departments facing staffing shortages, Axon's technology, particularly AI-driven solutions like Draft One and DFR (Drones as First Responders), is helping to increase officer productivity and manage workload. These tools enable officers to spend less time on administrative tasks and more time on active policing, and can even handle non-critical calls, potentially automating up to 50% of a police department's workload over time⏳.

    AI-generated summary of the company’s earnings call. Not investment advice.